Many in the community are aware that the announced exit of GE and GMAC finance from the dealer wholesale finance market left a $2 billion ?hole? in the industry. (Car dealers rely on rolling credit ? called ?floorplan finance? ? to fund their showroom inventory of new and used cars.)
The Government?s announcement today of a $2 billion Special Purpose Vehicle (SPV), established as a financing trust by participating leading Australian Banks, will allow viable car dealerships to secure the financing they need to keep the doors open.
Banks involved include ANZ, Commonwealth Bank, NAB and Westpac, with Credit Suisse providing the technical support to develop the SPV. The Australian Treasury is to work closely with the banks involved to finalise the details of the SPV.
?The SPV will be designed to support viable businesses. It will not seek to provide an artificial lifeline to unviable dealerships. The eligibility criteria that will apply will be fair and transparent,? Mr Swan said.
The SPV is to operate with Government support for a period of 12 months, after which its funding levels will run down.
?The SPV will be available to both new vehicle and mixed vehicle dealerships that trade cars, trucks, motorbikes, boats, caravans and other commercial vehicles as long as they are currently financed by GE Money Motor Solutions or GMAC,? the Treasurer said.
With no tax-payer money involved, and no ?hand-outs?, this announcement is a creative ?private sector? solution to the floorplan crisis that has hit the industry. Car dealerships are large employers ? collectively, across the industry, the withdrawal of GE and GMAC put thousands of jobs at stake.
Many now will be breathing a little easier.